Tory MP Andrew Tyrie, the chairman of the Treasury select committee, cast doubt on chancellor George Osborne’s claims taxpayers stand to make a £14bn profit from the 2008 banking bailout. Osborne unveiled plans on Wednesday to start selling a 79 per cent stake in Royal Bank of Scotland (RBS) – but at a loss to taxpayers who bailed out the bank. Osborne explained, citing a report published by advisory firm Rothschild, that a £7.2bn loss on the sale would be cushioned by a gain made on the sale of other state-owned assets like Lloyds. Overall, Rothschild estimated a £14.3bn surplus for the Treasury from its interventions in the banking sector. But Tyrie said Osborne’s calculation “...would benefit from a great deal of qualification... It excludes the cost of funding the bailouts (£17bn)....And it treats fees paid in exchange for a service as if they were income, or recoveries.” Shares in RBS were at 361.5p yesterday. after the sell-off plans were unveiled. The government would need to sell shares at 407p to break even on its £45bn 2008 recapitalisation of the bank. The first sale of shares is set to come in the next 12 months but could be as soon as September.

“There is another step we take today towards a new
settlement with financial services – and that is to get the government out of
the business of owning great chunks of the banking system.”

“...if you take into account all the sales we’ve authorised
of our bank assets, and the fees we’ve received – at the current valuations
taxpayers can expect to make £14 billion more than they paid out. Let me be
very clear about what I’m saying tonight: Our economic plan has been about
fixing what went wrong in the British economy. So, in the coming months we will
begin to sell our stake in RBS.”